Survey shows cost of class action increased in 2013

Frequently a sore spot for the corporate legal department, class action lawsuits can quickly mire even the most storied teams in mounting costs and lengthy battles. A recent survey confirms that class action lawsuit costs have grown in the past year, and that many expect the trend to continue in 2014.

The 2014 Carlton Fields Jorden Burt Class Action Survey compiled interviews and information from 346 general counsel at 326 different companies. According to the results of those interviews, class action spending increased approximately 12 percent from 2012 to 2013. In addition 25 percent of those interviewed anticipated that those costs would continue to increase in 2014.

Potential changes in class action procedure from cases like Halliburton Co. v. Erica P. John Fund, Inc., as well as increasing scrutiny from stakeholders on cybersecurity could be generating the concerns around increased spending. 24 percent of organizations interviewed listed cybersecurity as a hot button issue for the coming year, nearly doubling consumer fraud, which 12 percent of respondents listed.

But while there were some new areas of concern for GCs, the survey also showed the old standbys as alive and well for most major corporations. Of the cases listed, labor and employment, as well as consumer fraud made up more than 50 percent of all matter and spending for the organizations, still dwarfing the amount spent on data security.

But the news isn’t all bad.

Class action case law has ruled predominately in the favor of organization over the last several years. Supreme Court ruling such as AT&T v. Concepcion and Comcast Corp. v. Behrend, have made it markedly more difficult for plaintiffs to gain class certification. In particular, the AT&T case, which okayed the use of arbitration agreements in consumer contracts, has increased the practice of forced arbitration considerably. 40 percent of companies reported they now use arbitration clauses that prevent class actions, further protecting themselves from the ramifications of class action lawsuits.